This is the first in a series of posts outlining the basics of FHA loans. What you qualify for, how much the down payment is, underwriting and documentation along with tips and tricks for a smooth closing will all be covered. Feel free to contact me directly with any specific questions.

How Much Can I Borrow?

How much do I qualify for is ALWAYS one of the first questions I’m asked. There are two things to consider when you are looking to purchase via FHA in Georgia. First, you’ll be limited by FHA loan limits. These are county specific. For example an Atlanta FHA loan is limited to 2009 Metro Atlanta loan limits of $320,850 for single family residences. The rest of Georgia, including Savannah, are limited to $271,050.

The second thing to consider is debt to income ratio. FHA guidelines like for you to use no more than 31% of your income for housing. It is possible to exceed this amount with compensating factors such as a high credit score or plenty of assets. As far as your total debt to income ratio, FHA would like you to spend no more than 43% of your total income on debt. Of course, the same compensating factors listed above apply to this ratio as well so you can exceed that guideline in some instances.

What is the Down Payment Required?

The down payment requirements are changing to 3.5% in 2009 for traditional FHA purchases. However, FHA 203K Loans, along with FHA 203H loans for disaster victims and FHA Energy Efficient Mortgages, are not affected by the change and will remain at 3% down. One note is that on the FHA 203K and other FHA specialty products requiring the lower down payment, you can still include the appraisal and a portion of your closing cost in the down payment.

What Paperwork Will I Need?

When applying for your Georgia FHA loan you’ll need to fully document your income and assets along with providing full explanations of any credit problems in the past 2 years.

1. Two Years W2 & Two Most Recent Paystubs.
2. Tax Returns generally only needed for self-employed borrowers, borrowers with rental income and borrowers using commission income to qualify.
3. Two months full bank statements. Must be “official” statements and must include ALL pages.
4. Most recent statements for retirement and investment accounts.
5. Color copy of Driver’s License and Social Security Card.
6. Credit explanation letters, bankruptcy papers, divorce decrees, child support documentation, leases on rental properties, etc are required if applicable.

What Credit Score do I Need?

FHA and lender guidelines generally require a 580 mid score or above to qualify. However, 620 or above should get you the best FHA rate available. The higher the better though and home buyers with excellent scores will generally be required less documentation and have faster underwriting turn times.

How Long Does the Process Take?

That depends on a number of factors, but 30 days or less should be the goal on a purchase. Borrowers with lower credit scores will generally be required to document more and therefore can sometimes take a little longer than borrowers with excellent credit. If you are doing a FHA 203K Renovation Loan then 30 days is still reasonable on the 203K streamline version, but plan for 45-60 on the full 203K due to the additional third party items needed. FHA Streamline refinances should be the quickest to close because of the reduced documentation requirements.

How Do I Get Started?

The first step is ALWAYS to call an experienced FHA loan officer to help you determine what you are qualified for so you can get a pre-approval. You should also be prepared with you income and asset documentation. The speed in which we can close you loan often depends on you more than anyone else.

Apply for Your Georgia FHA Loan

Jonathan Blackwell FHA 203K Renovation Specialist Hometown Lenders Atlanta, Georgia, 30317	Work: 404-551-3845 Mobile: 404-519-5383 www.203KLoan.net